In his autumn Budget, Chancellor Rishi Sunak painted an optimistic picture of the state of the UK economy, which he says will return to pre-Covid levels by 2022.
Annual growth is set to rebound to 6.5% this year, followed by 6% next year. Wages have grown in real terms by 3.4% since February 2020 and government borrowing is set to fall next year and for the following four years.
We’ve rounded up the key issues for small businesses to help you make sense of what the changes could mean.
Perhaps most significant for customers within the Verastar Group, Rishi Sunak revealed roughly £7bn worth of cuts to business rates.
Included are the cancellation of next year’s increase in the rates multiplier and a 50% cut to next year’s rates for most retail, hospitality and leisure businesses, up to a maximum of £110,000.
The 50% rates reduction is likely to benefit around 90% of businesses across the sectors, from newsagents and grocers to hairdressers, pubs, gyms and cafes.
Small business owners will need to look at their payroll budgets as those on the lowest wages get set to receive a significant boost to their income in April 2022.
Those aged 23 and above are eligible for the “National Living Wage” – which will go up by 6.6%, as the hourly rate increases from £8.91 to £9.50.
The National Minimum Wage for 21 and 22-year-olds rises from £8.36 to £9.18; for 18 to 20-year-olds from £6.56 to £6.83; and for under-18s: from £4.62 to £4.81 (all rates hourly).
The Apprentice Rate rises from £4.30 to £4.81 per hour.
Alcohol prices are rising – particularly in pubs, bars and restaurants – due to higher wages and rising energy and supply costs.
In response, the Chancellor today announced an overhaul to alcohol duty which he described as “the most radical simplification of alcohol duties for 140 years”, coming into force in February 2023.
The new system means higher duty for stronger alcohol, with taxes on sparkling wine, draught beer and cider set to be cut, but stronger drinks such as stronger red wine and high-strength white ciders will be taxed more.
Measures also include a 5% cut in duty on draft drinks to support pubs, and the scrapping of the planned increase in duty on spirits, wine, cider and beer that had been due to take effect from midnight on Wednesday.
Fuel duty freeze
There has been a freeze on fuel duty for more than a decade and this will continue for at least another year, the Chancellor announced.
During his Budget speech, Rishi Sunak said: “With fuel prices at their highest level in eight years, I’m not prepared to add to the squeeze on families and small businesses, so I can confirm from today the planned rise in fuel duty will be cancelled.”